Advances in Economics, Business and Management Research, volume 102 5th International Conference of Accounting and Finance (ICAF 2019) The Concept of Just Price in : The Philosophy of Pricing and Reasons for Applying It in Islamic Market Operation

Kumara Adji Kusuma Universitas Muhammadiyah Sidoarjo Universitas Muhammadiyah Sidoarjo, Jalan Mojopahit No.666 B, Sidowayah, Celep, Sidoarjo Sub-district, Sidoarjo Regency, East Java, 61271 [email protected]

Abstract – covers a large number of Religion is interpreted as a system of faith and economic areas including the theory of pricing. This theory worship of the Absolute One, as well as rules governing has been developed in conventional economics, while only a the relation of human with human and human with nature. few are covered by Islamic economics. This paper aims to As a religion of revelation, the teachings of Islam are conceptualize the just price in Islam using the qualitative derived from divine knowledge and notices in the holy approach. It is exploratory research and content analysis; the analyzed data were obtained from various sources: books of the Qur'an and as- (Siregar, 1999: 127). , Sunnah, Islamic philosophers, and jurisprudence. The definition of Kâffah is to call on Muslims, so that This paper reveals that a just price in Islam is based on the life is intended to fully devote to in all sincerity (al- principles of ‘an taradhin minkum (mutual goodwill) and al’adl (justice) which must exist in goods and services Fattah, 1995: xiii). The word al-Silm in (a term for a pricing. These are also described in the principles of Islamic chapter of the Quran) al-Baqarah: 208 is Islam. This verse market operations which is to uphold justice and the points out: "enter all of you wholly into all the teachings willingness between the market players as well as to of Islam", which means to proclaim Islam and practice it maintain the order of the supply and demand in the market. thoroughly. Taking one part and leaving the others is fallacious. Keywords – pricing, justice, Islam, market, transaction, ‘an taradhin Furthermore, Shari'a in this context is the implementation of economic activities included in the 1. INTRODUCTION process, in dealing with fellow humans. The results of this implementation are determined by Allah with a warrant, The just price is a concept involving both economics so that Muslims enter into Kâffah Islam, particularly and ethics. The idea seeks to distinguish between just and about pricing. unjust methods of gain in commerce. Its classic exposition was given by a Catholic theologian, Thomas Aquinas; 2. LITERATURE REVIEW although it was not his original idea. It was derived from According to the Kamus Besar Bahasa Indonesia, the traditional Christian opposition to usury, originally "price" is defined as: 1) the value of goods determined or meant any/all interests on money lent. in form of money; 2) the amount of money or other means The concept of just price in its traditional sense is of exchange, which must be paid for the product or largely considered obsolete. As an example, the tradition service, at a certain time and in a particular market; 3) of artisan guilds deciding the goods’ price would be honor (of oneself); 4) use (meaning, interest, information, tsaman) has fairly the same) ثمن considered a cartel, an unethical and often illegal practice etc.). In , the word today. It does not imply that, in certain situations, prices meaning, which is price. ,مال َال يَتَعَيَّ ُن بِالتَّ ْعيِيِ ِن which are too high or too low would not be problematic; The definition of price, in general, is the issue, however, is seen to lie in the imperfect meaning a case that is not necessarily determined. This competition, or possibly the exploitation of an tas'îr is derived from the word sa'ara. In the Arabic insufficiently informed party, not in the deviation of dictionary al-Muhîth fiy al-lughah (Ṣāḥib ibnu Ubbad in prices from a specific range per se. the 4th century H), the expression sa'aro ahlu sûq (traders in the market set prices) means as'arû (they set prices). In the Islamic context, Prophet SAW Meanwhile, as-si'r means price and is a price benchmark (Sallallahu Alayhi Wa salaam - may God's prayers and (allażi yaqûmu ‘alaihi tsaman). Thus, at-tas'îr means peace be with him) was sent by Allah to deliver the pricing (taqdîr as-si'r). message of Islam which is a blessing for the entire In the economic context, prices are manifested in the universe (Abu Zahrah, 1994: 21). Thus, Islam is a religion supply and demand mechanism summarized in the Supply for all humanity regulating human life based on its nature. and Demand Theory–a description of various However, the message of Islam conveyed as a religion by relationships in the market existing among prospective Allah is attributed to human beings with reasons as well buyers and sellers of an item. The supply and demand as common sense, and are not charged to those without model is used to determine the prices and quantities sold (Rifa'i, 1994: 11).

Copyright © 2019, the Authors. Published by Atlantis Press. This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/). 116

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in the market (Landsburg, 2008: 3). This model is method is intended to analyze all discussion about the essential for conducting a microeconomic analysis of concept and basic principles of a just pricing theory in buyers and sellers behavior and interactions. It is also Islam. The author prepared basic procedures for the used as a starting point for various other economic models research design and the content analysis consisting of six and theories. This model estimates that in a competitive steps of data analytics: market, prices will function as a counterweight between 1. Formulating research problems. the quantity demanded by consumers and the quantity 2. Arranging the thinking framework of research offered by producers, thus creating an economic balance concept operationalization. between price and quantity. This model accommodates 3. Collecting data through a sampling of the the possibility of factors that can change balance, which selected data sources. will be displayed in the form of a shift from demand or 4. Creating the categories used in the analysis. supply. 5. Collecting data from the selected documents Prices also manifest in transactions. Transactions, using descriptive quantitative. which is approval/ payments in trade between parties 6. Interpreting the data obtained. involved in the business, work according to the price mechanism. This occurs through an agreement on the 4. RESULT AND DISCUSSION price of goods or services offered; it is also one of the Transactions in the economy are done based on the elements determining a transaction’s occurrence. A buyer price mechanism. This mechanism occurs through an agrees in a business transaction because the price offered by the seller seems to fit, whether it occurs through agreement on goods or service price and becomes one of bargaining or direct purchase. In Islam, however, the the determinants of a transaction’s occurrence. A buyer agrees in a business transaction because the price offered muamalah (means dealing/ transaction) is more specific to by the seller seems to fit, whether it occurs through historical or business transactions. Moreover, based on the bargaining or direct purchase. In Islam, however, the principle of fiqhiyah, such as harmony and conditions, transactions must be agreed voluntarily and mutually (‘an muamalah (means dealing/ transaction) is more specific to taraḍin minkum) as well as uphold the principle of justice historical or business transactions. Moreover, based on the principle of fiqhiyah, such as harmony and conditions, among those involved in the transaction. transactions must be agreed voluntarily and mutually (‘an The principle of willingness or mercy can be viewed araḍin minkum) as well as uphold the principle of justice in the Qur'an 4: 29, while the principle of upholding among those involved in the transaction. justice is in the Qur'an 16: 90, revealing that Allah commands to be fair, do good and be generous towards The principle of willingness is stated in Qur'an 4: 29. relatives, as well as prohibits acts of abomination, munkar In a transaction, it is not only will that should be part of (anything bad), and oppression. the process, but also justice, as inferred from the Quran In terms of the transaction, the Quran clearly states 16:90. Thereby, as stated in the Qur'an, in addition to that in addition to the willingness (‘an taraḍin), Allah willingness (among the adherents), Allah requires justice requires justice to be a condition involved in a transaction. to be a condition involved in a transaction. This is because This is because being just will bring you (adherents) being just will bring you (adherents) closer to Allah and closer to Allah and to being God-conscious, as written in to being God-conscious, as written in Al Quran surah 5: Al Quran surah 5: verse 8, explaining the command for verse 8, explaining the command for adherents to uphold adherents to uphold justice for Allah is well-aware of justice for Allah is well-aware of what they do. Therefore, what they do. Therefore, justice is one of the central justice is one of the central themes in all of the Muslim themes in all of the Muslim activities, including in the activities, including in the economy. economy. 4.1. Value and Price according to the Concepts of 3. METHODOLOGY Qimah, Tsaman, and Si'r This paper aims to conceptualize the just price in ‘Price’ in Arabic terminology, which is as-si'ru, is Islamic perspective using the qualitative approach, of anything that can be used as a tsaman (a barter tool in which the type is exploratory research. The research is buying and selling). In the book Mausu'ah al-Iqtiṣad al- conducted for a problem that has not been studied Islamy, Dr. Rif'at Sayyid al-'Iwaḍi explained that in terms (Stebbins, 2001) (Shields & Rangarajan, 2013) regarding of Islamic economics, price is defined as an estimation the conceptualization of just price in Islam; this will (measure) for the sale of goods, of which being expensive enrich the Islamic Economics study, particularly on the or cheap are determined by Allah only, without removing pricing theory. The research employs technical-narrative some factors affecting the item (al-'Iwaḍi, 2009: 396). descriptive analysis (Yin, 2013). The data were collected with Islamic finance, investment, and jurisprudence Qimah is the value to be achieved in doing a charity. experts. Four types of qimah must be placed in their respective places; they are qimah ruhiyah (affluence value), qimah This research used the content analysis method, insaniyah (human value), qimah khuluqiyah (moral which is a technique for concluding by objectively, value), and madiah qimah (material value). In the context systematically and generally identifying the specific of the business, qimah (value/price) is the power of items characteristics of a message (Holsti 1969: 14). This

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or service exchange quantitatively measured by the a. Qimah consists of several types as follow: number of goods or amount of money. 1) Qimah Tijariyyah Market value; the prices of goods or services Islam upholds justice (al `adl) in pricing. Several are determined by market demand and terminologies in Arabic which mean ‘just price’ among supply. others are: si`r al-mitsl, tsaman al-mitsl, and qimah al- 2) Qimah Mudla'afah (Value-added) 'adl. Accordingly, the term ‘just price’ is obtained. In 3) Qimah Haliyah Arabic, some sentences that show ‘just price’ are Si`r al- Value added is the economic added value of Mitsl, Tsaman al-Mitsl, and Qimat al-‘Adl. goods or services due to economic activities. Additionally, in the days of the first Islamic scholar, 4) Qimah Dakhiliyah Ibn Taymiyah, he paid special attention to the term. He Intrinsic value is the original value that is often used two terminologies in discussing the term physically inherent, for example, the value ‘price’: `Iwad al-Mitsl (equal compensation) and Kamal of metal contained in coins. Tsaman al-Mitsl (equal price). In his al-Hisbah, he stated 5) Qimah Daftariyyah that equal compensation will be measured and estimated Book value is the value of the assets listed in by equal things, and that is the essence of justice (nafs al- the accounting records. ‘adl). These days, the term Al`Adl Qimat is also widely 4.1.2. Value and Price in the Si'r Concept used by judges in Islamic law regarding business transactions in defective goods sale, power struggles, There are 6 parts of value and price concept: collateral for property disposing, etc. (Solomon Ramaḍan a. Si'ru Taklifah Muhammad, 2010: 282). Price based on cost (BEP price) is the price of a 4.1.1. Value and Price in the Qimah Concept product that can only cover production costs and distribution without profit margins Qimah is a price in the context of value (price). It is b. Si’ru al-Suq the power of items or service exchange quantitatively The market price is the price formed based on measured by the number of goods or amount of money. supply and demand. The term qimah al`adl is also widely used by judges in c. Si’ru as-Sharf Islamic law regarding business transactions in defective The exchange rate is the price of a currency in goods sale, power struggles, collateral for property terms of another currency. disposing, etc. The term Qimat al-'Adl (just price) was d. Si’ru al-Iqfa used by the Messenger of Allah and the Caliphs, as an The closing price is the price of securities traded example, when the Prophet commented on the at the end of trading time. compensation prescribed in freeing a slave. The slave was e. Si’ru al-Atho ' freed and the owner received a just price for The quotation price is two prices commonly used compensation or Qimat al'adl (Shahih Muslim). It is also in the trade of securities or foreign exchange reported by Khalifa Umar bin Khattab and Ali bin Abi (bid-ask price). Talib, when Umar bin Khattab determined the new price f. Si'ru al-Asas (value) in Diyah (fine/ransom); (the value of) dirham The basic price is the price used as the basis for (UAE currency) decreased and prices increased. calculating the price of the goods being traded. The just price has become a fundamental grip on 4.1.3. Value and Price in the Tsaman Concept Islamic transactions. In the principles, business transactions must be carried out at a just price because it From the previous explanation, in Arabic the term is a reflection of the Islamic commitment to tsaman refers to the medium of exchange or money, while comprehensive justice. In general, a just price does not the term means the price displayed or written, and the lead to exploitation or oppression harming one party and meaning of Qimah implies more on ‘value’. In the context benefits the other. Prices must fairly reflect the benefits to of justice, the term tsaman al-'adli, or in Ibn Taimiyah's the buyer and seller; for instance, the seller gets a normal term, Kamal Tsaman al-Mitsl, is also known as ‘equal profit and the buyer receives benefits equal to the price he price’ – the standard price applied when people sell their pays. goods and can generally be accepted as something equivalent for the items (or similar item) at a specific time The just price concept based on equal price clearly and place. So, equal prices are prices formed by market shows an advanced view in price theory. The price theory forces operating freely, without fraud. concept is only viewed from the producer’s price because it is only based on production costs. The just price concept provides a sense of justice from a broader perspective because consumers are also involved in estimating the price of an item. This is why Islamic sharia highly values the price formed by the strength of demand and supply in the market.

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4.2. The Concept of Price in Islam work is the concept of social welfare or utility (common good) – a concept covering all human activities and 4.2.1. The Concept of Price from Islamic Thinkers creating a close connection among individuals and The concept of price in Islam has attracted Islamic society. thinkers. They used the economic conditions around the According to Al-Ghazali, the law of nature is price and on its mass; their views are as follows: everything: an expression of various desires coming from 4.2.1.1. The Concept of Price According to a person to satisfy each other's economic needs. In his view, the market is the natural order as prices in the Abu Yusuf was a mufti of the of Harun al- market will be naturally formed by the factors affecting Rasyid. He wrote the first book on the taxation system in prices. Al-Ghazali's opinion is more suitable for perfectly Islam entitled Kitab al-Kharaj. Abu Yusuf was listed as competitive markets. the earliest ulama (a Muslim scholar whose knowledge concerns Islamic sacred law and theology) that started the Like other thinkers of his time, he also discussed discussion of the market mechanism. The phenomenon prices often directly related to profits. Profits are not that Abu Yusuf experienced was when goods were scarce, related to income and costs. For al-Ghazali, the benefits prices tended to increase, whereas when the goods were are compensation for travel exhaustion, business risks, abundant, prices tended to decrease. and a self-safety threat to the merchant. Although he did not agree with the excess profits being the motivation of Abu Yusuf asserted that there are no certain traders, he thought that the real advantage was the profits limitations on cheap and expensive price. Something must in the hereafter. The normal profit is in the range of 5 to have regulated this phenomenon, yet the principles are 10 percent of the goods’ price (Karim, 2006: 156). unknown. Cheap price is not caused by the abundance of food, nor is it expensive due to scarcity of food. ‘Cheap’ 4.2.1.3. The Concept of Price According to Ibn and ‘expensive’ are God's provisions, as sometimes food Taymiyyah is scarce but the price is cheap. This view indicates a Ibn Taimiyah explained the mechanism of exchange, negative relationship between supply and price. Indeed, the free market economy, and how price trends occur as a the price does not depend on the supply, and therefore the result of demand and supply forces. If the demand for decrease or increase in prices is not solely related to the goods increases while supply decreases, the price will increase or decrease in the supply. In this case, Abu Yusuf increase. On the contrary, scarcity and abundance of seems to deny public opinion about the inverse goods may be caused by fair or unfair actions. This relationship between demand and price. In fact, the price occurred because there was an assumption in his time that does not only depend on the offer but also on the demand. the increased price was a result of injustice and actions He emphasized that other variables were affecting this, from breaking the seller’s law, or market manipulation. but he did not explain extensively. Ibn Taymiyyah pointed out that increase and decrease In the economic analysis concerning the problem of in prices are not always related to tyranny (zulm) price control, Abu Yusuf opposed the authorities who set committed by someone. Sometimes, it is due to a prices. This opinion is based on a discussing the production shortage or a decrease in imports of the goods price narrated by Abu Dawud: Allah is the one who sets requested. If there is a demand to increase the number of the price, the closest, the most magnificent, and the most goods while the ability to supply them decreases, the price gracious. I hope to meet God in a situation where none of will naturally increase. On the other hand, if the ability to you demands that I treat tyranny in terms of blood and supply goods increases and the demand decreases, the wealth (Abu Dawud). In his view, the price is God's price will decrease. Scarcity and abundance of goods must provision. It will be formed following natural laws not be caused by a person's actions. It could be related to applied in a certain place and time based on the factors things that do not involve injustice, or occasionally, it can affecting the price itself. Abu Yusuf's opinion is relevant also be caused by injustice. Allah is the Greatest that to a perfectly competitive market in which there are many creates the will in the hearts of men (Islahi, 1997: 37-42). sellers and buyers; thus, prices are determined by the market. 4.2.1.4. The Concept of Price According to Ibn Khaldun 4.2.1.2. The Concept of Price According to Al-Ghazali In his work, Ibn Khaldun divided the types of goods Similar to the previous Muslim scholars, Al-Ghazali's into basic and luxury. He stated that if a city develops, the attention to people's lives was not focused on one population will subsequently increase, and the prices of particular field but all aspects of human life. He basic necessities will be prioritized. As a result, offers conducted extensive to defend the increase and prices decrease. As for luxury goods, the teachings of Islam. His attention in the economic field can demand will increase in line with the development of the be seen in his fiqh science because, in essence, it is an city and changing lifestyles; this leads to the increased inseparable part of Islamic jurisprudence. price of luxury goods. In his view, prices are the result of Al-Ghazali's socio-economic thinking is rooted in a laws of demand and supply. The only exception to this concept which in his term is called the Islamic social law is the price of gold and silver, which uses a monetary welfare function. The theme that forms the basis of all his standard. All other items are subjects to market-dependent

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price fluctuations. If a product is rare and is often the principles of moderation and tolerance, it is also stated requested, the price is high. If a product is abundantly in the term "wasath" (middle). "Wasath" is an attitude available, the price will be low (Muhammad, 2004: 46). showing a balance between two extremities and reality in understanding human nature, both by refusing 4.3. The Islamic Concept of Justice extravagance and excessive asceticism. A balanced The Islamic concept of justice will be discussed attitude immediately emanates from the attitude of following the Quran and Sunnah. It is essential because monotheism or profound insight into the presence of God economic and business justice is part of a broader concept Almighty in life, which means awareness of the unity of of justice in Islam. The concept of ultimate suffering purpose and the meaning of the entire natural life that He defines injustice to certain ideologies. The Islamic created (Maarif, 2006: 17). concept regarding the peak of suffering is punishment on In details, the meaning of justice based on faith is the day of vengeance. An economic life which is not demonstrated in respect of the mandate (the sacred under the benchmarks of Islam may lead to failure in the deposit of God) to humans, for each other and the Hereafter. Thus, to save yourself, your family and all mandate concerning the rule of power, in particular. The those involved in the torment of hellfire will require power of government is a necessity to order our lives. justice to be established; it will apply otherwise when Each form of power is combined with people obedience to someone fails to enforce justice. Moreover, welfare in the the ruler; thus, power and obedience are inseparable. world is upright if justice is upheld. This is the conclusion However, the power that is worthy and must be obeyed is of Mufassir Quraish Shihab (Shihab, 1998: 68) citing the one that only reflects the sense of justice for the sake of Quran surah Al-Maidah verse 8 as related to surah Al- carrying out God's mandate. A'raf verse 96, and surah Nuḥ verses 10-12. Therefore, an explanation of Islamic justice is generally needed. The word al ‘adl in the Quran various aspects and objects of justice have been discussed by the Quran, 4.3.1. The Meaning of ‘Just’ in Islam which also concerns the partakers. This diversity results in Allah reveals justice in the Quran in three words: ‘adl, various meanings of justice. According to the research qisth, and mizan. When the Quran refers to Allah having a conducted by Shihab (1998), there are at least four just nature, the word used is only al-qisth (Surah Ali meanings of justice: 1) Equality, 2) Equity: putting 'Imran (31: 18). The word al 'adl which recurs twenty- something in its place, 3) Balance / Harmony, 4) Justice eight times in the Qur'an, none of which is Allah’s attributed to the Divine attributes. Nonetheless, various aspects and objects of 4.3.2. The Urgency and Wisdom of Justice justice have been discussed by the Quran, which also Enforcement: Bringing Welfare into Reality concerns the partakers. This diversity results in various meanings of justice. Justice and prosperity are noteworthy topics in Islamic economics. It is because people always question the The word 'adl is the masdar form of the verb 'adala - connection between justice and welfare. Among the عدَ َل - يع ِد ُل - ع ْد ًال - ya'dilu - 'adlan - wa' udulan - wa' for Muslim scholars, there are clashing opinions about which َ َ ْ َ Ma'luf, 1982: 556) This verb rooted with) ((و ُعدُوالً - وعداَ َل ًة .one that must take precedence: welfare or justice َ ْ َ َ whose main ,( َالم) and lam (دَال) dal ,(عيْن) the 'ain However, when referring to several Quran verses, it is َ -straight state) and 'al = اَ ْال ْستواء) ' meanings are 'al-istiwa revealed that Allah's commandment to uphold and to put ِ ِ َ .(deviant state) (Munawwir, 1997: 217 = اَ ْال ْعوجاج) 'i'wijaj justice first. Allah's command to uphold justice is ِ ِ َ The series of surahs contain contradictory meanings, conveyed in some verses, such as in the verses of surah which are straight or equal, and deviant or different. Al-A'raf verse 29, Al-Nahl verse 90, Al-Rahman verses 7- From the first meaning, the word al‘adl means set the 8, and Al Maidah verse 8. In these verses, Allah explicitly law correctly. Therefore, a person who is fair is straight commands to uphold justice. Therefore, it is in and his attitude always shows the same standard, not a accordance with the fiqhiyah rules, stating that God's double-standard. This is the original meaning of the word command is obligatory for Muslims. Allah, in Al-Quran al‘adl, which makes the partaker "not take sides" with one Surah Al Maidah verse 8, instructs the adherents to of the disputants because both sides (the right and the uphold the truth because being just will bring you wrong) must obtain their rights. Thus, he does something (adherents) closer to Allah and to being God-conscious properly and not arbitrarily (Shihab, 1998: 44). (piety). This will bring eternal happiness in the hereafter because God will ask for accountability from every Al-Asfahani asserted that the word ‘adl means giving human being in the world. Devotion is the standard of the same share. Meanwhile, other experts define it by "passing" on the judgment day called the yaumul. placing something in its proper place. Some state that giving is a right to give to the owner through the closest From various verses about the command of Allah in way. This is in line with Al-Maragh’s definition of the upholding justice, and His word in Al-Quransurah Al- word al‘adl by conveying the rights to the owner Aafr verse 96, as well as in surah Nuḥ verses 10-12, effectively. justice will lead to piety and piety results in prosperity. Welfare, which is based on the word "Prosperous" In addition, the understanding of ‘just’ in the Quran is meaning safe, secure and wealthy (according to Kamus often related to being balanced and mediating. Guided by Besar Bahasa Indonesia), means to survive (apart) from

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all kinds of disturbances, and difficulties, etc. Thereby, undisturbed - between supply and demand. He asserted social welfare is a condition of a prosperous society. that if people sell their goods in a normal way (al-wajh al- Ma'ruf) without using unjust methods, the price increases 4.4. The Concept of Just Price in Islam due to the effect of the lack of inventory or increasing Market economy transactions operate based on price population (increasing demand), and it is all because of mechanisms. For the transaction to provide justice for all God. In such cases, forcing the seller to sell his goods at a parties involved, the price must also reflect justice. In the special price is a wrong compulsion (ikrah bi ghairi haq). view of Islam, transactions must be carried out voluntarily A just price has become a fundamental grip on Islamic (‘an taraḍin minkum) and provide proportional benefits to transactions. Based on the principles, business the partakers. The concept of a just price has been transactions must be done at a just price because it is a introduced by the Messenger of Allah that became a reflection of Islam's Sharia commitment to subject of discussion from the scholars in later times. In a comprehensive justice. In general, a just price is a price normal situation, just prices are created through a that does not lead to exploitation or oppression (injustice), mechanism of demand and supply, provided that the inflicting harms to one party and benefits the other. Prices market mechanism can run perfectly. must fairly reflect the benefits to buyers and their sales, However, the market price created is often deemed that is, the seller gets a normal profit and the buyer incompatible with policies and the overall state of the receives benefits equal to the price paid (Islahi, 1997, economy. In the real world, the market mechanism p.101-102). sometimes does not work well due to various factors. For The concept of a just price based on the equal price this reason, the government has a big role in managing concept clearly shows an advanced view in price theory prices. Islam highly upholds justice (al-'adl) in pricing. compared to, for example, the just price concept. The Several terminologies in Arabic meaning ‘just price’ are: price theory concept is only viewed from the producer’s si'r al-mitsl, tsaman al-mitsl, and qimah al-'adl. The term price because it is only based on production costs. The qimah al-'adl (just price) was once used by the Messenger just price concept provides a sense of justice from a of Allah in commenting on compensation for the broader perspective because consumers are also involved liberation of slaves, in which the slave would become an in estimating the price of an item. This is why Islamic independent human, and his employer still received Sharia highly values the price formed by the strength of compensation at a just price or qimah al-'adl (Shahih demand and supply in the market. Muslim). The use of this term is also found in reports related to the caliph Umar bin Khatab and Ali bin Abi 4.4.1. Preferring the Hereafter to Thie Worldly Life Talib. Umar bin Khatab used the term ice when setting a The utility and price theory in Islam, referring to new value for diyah (fine/ransom) after the value of the Imam Al-Ghazali and Mufti Muhammadi Taqi Usmani, dirham decreases so that prices increase (Ibnu Hanbal). stated that ‘achievement’ in the Hereafter is more The term qimah al-'adl is also widely used by important than in the worldly life; in fact, this world is judges who have codified Islamic law regarding business only a test, a preparation and a path to the Hereafter. From transactions regarding defective goods sale, power this point, the market players are expected to lean towards transfer, forcing goods hoarders to sell their stockpiles, the welfare of others rather than self-interest, or at least removing collateral for a property, and so on. In general, apply self-interest in Sharia. A market player will thus they thought that a just price of something is the price collaborate with others rather than compete with other paid for the same object given at the time and place players. This is expected only when individual players are submitted. They also often used the term tsaman al-mitsl believers and have confidence in metaphysical (equal price) (Nujaim, 1980, p.362). Even though these dispositions confirmed by Islam. terms have been used since the time of the Prophet and 4.4.2. The Essence of Islamic Market Operation Khulafaurrasyidin, the first Muslim scholar who gave Principles: Upholding Justice special attention to them was Ibn Taimiyah. He often used two terminologies in price discussion, namely ‘iwad al- Islam is a religion of justice. Allah commands every mitsl (equal compensation) and tsaman al-mitsl (equal Muslim to be just. Therefore, upholding justice is the duty price). In his ratio, Taimiyah (1976) said that equal of every Muslim. The enforcement of justice can be compensation will be measured and estimated by equal realized if injustice and falsehood are abolished, or at things, and that is the essence of justice (nafs al-ʻadl). He least avoided; doing something good that leads to distinguished between two types of prices: prices that are injustice is also prohibited (it is the principle of sad unjust and prohibited, as well as just and preferred prices. żariah). Being unjust is a prohibition; it must always be He considered that the equal price was a just price. suppressed and avoided. Therefore, it is not surprising that God prohibits and instructs us to avoid some actions Ibn Taimiyah defined equal price as the standard price to realize justice in the world; this has implications for the (s'ir), in which the population sells their goods and afterlife. This becomes the principle in muamalah, stating generally accepts the price as equal to the same item at a that all affairs or transactions are permitted unless there is specific time and place. In the ratio, he explained that this an argument prohibiting them (Karim, 2010: 29). equal price followed the desires or the prices set by the market forces operating freely - competitive and

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Essentially, the prohibition applied only if the transaction This uncertainty can be related to the outcome of the causes injustice; thus, Islam provides boundaries. contract, the product itself, the medium of exchange, or how it will be paid (Ibid). Two mutually exclusive God instructs Muslims to avoid and negate some of transactions giving conditions to each other will also the factors affecting the prohibition of transactions. Al- fall into this category; for example, I will sell this car Quran and Sunnah of The Prophet Muhammad have to you at the price of X if you sell your house at price provided various guidelines. It is believed that the Y, or I will sell this car for the price of X if the third obedience will ensure a just economic order: an order in party sells his cell phone. Furthermore, Qimar means which all partakers are saved from worldly losses gambling and maysir is a game of chance, which has (directly caused by any partaker's crime) and eternal been banned in the Quran Surah al-Maidah, verse 90. losses in the hereafter. These guidelines are related to the 5) Avoid fraud and whistle-blowing. Fraud and individual's internal conditions and how he is expected to whistle-blowing are also prohibited by Sharia. It is apply them in the market. The guidelines are explained as mentioned in the Quran Surah al-Humazah verses 1- follows: 6. Imam Al-Ghazali explained various forms of fraud 4.4.3. The Do’s and Dont’s (related to being just and that might occur while doing business; they are: unjust) overestimating the product quality, underestimating or hiding product defects, underestimating or hiding Avoiding all activities declared haraam or prohibited the actual quantity of the product (purchased based by Sharia is Muslims’ first priority for 'achieving success' on price, volume, etc.), and overestimating or hiding in the Hereafter (the Judgement Day) over the worldly market prices. This also includes the issuance of life. This includes avoiding Riba, Garar, Maysir, trading counterfeit money and its use on the market (al- illicit goods, stockpiling, committing fraud, and using Ghazali, 2007: 129-35). force or taking over an item without the buyer or seller’s 6) Avoid all illicit goods: These include wine, pork, all consent: products made from alcohol, or containing chemicals 1) Avoid all forms of Riba-based transactions: Usury extracted from non-halal sources, blood, or animals (riba) is simply defined as profit on loans or debt. slaughtered not based on the rules of Sharia. It also There are two types of this: (a) Usury in the Quran involves pornography, images of animals or humans, and (b) Riba in the Hadith. In the Quran, usury is the films containing vulgarity, statues resembling profit of loans or debt refers to the second type (riba) animals or humans, prostitution or any related item, found only in the Hadith, which prohibits a barter of music instruments and recordings in the form of CDs, similar type of goods in different quantities and tapes, DVDs or soft copies such as MP3 or other weights. digital formats. Human body parts are also prohibited 2) Avoid Hoarding: Imam Al-Ghazali cited various from being traded except in the case of an of the Prophet Muhammad, who was very emergency. Selling someone else’s goods (without strict in hoarding prohibition and encouraging the consent) is also considered sinful (Mansoori, 2008: sale of goods without storing them somewhere (Ibid, 35-36). p. 125). It is permitted only when the goods are not Apart from avoiding all of the above, a Muslim trader basic necessities and are available as surplus; they are will fulfill the contract, agreement, promise (Qur'an 2: given to poor people who cannot purchase these 177; 17:34). He will not bribe to win the contract goods when they need them. This is preferred (Tirmizi, Hadith: 1256; Musnad Ahmad, Hadith: 6490; because it will ensure that the business is ‘expensive’ Al-Mu'jam Al Kabeer, Hadith: 1400). He will appreciate in the Hereafter. meritocracy (Ahmad, 1999: 86). He will not exploit the 3) Have free will (for the trading participants): This vulnerability of sellers and buyers if he possesses high means obtaining any item by threat or vanity. It is bargaining power (Khan MA, 1994: 10). prohibited and the exchange contract is not allowed. This is mentioned in Surah Al-Nisa, verse 29. Tahir Imam Al-Ghazali also emphasized not to set a higher Mansoori (Mansoori, 2008: 5) further added an level of profit facilitating customers. In his view, taking explanation by saying that the important parties have high profits under the agreement of the buyer is not a certain and definite knowledge of the subject matter haram, but setting lower profits or doing an act of of the contract, the rights, and obligations derived generosity (al-Ghazali, 2007: 135) is Ihsan (it should not from it. This rule brings serious implications when be lower than market prices (Usmani MM, 1999: 41)). In dealing with devaluation or reduction in purchasing the same context, he further exemplified that many power of the currency applied because the actions of participants usually give more than what is stipulated financial institutions are performed without the when making transactions (ibid: 137). consent of the rightful owner. According to Al-Ghazali, lending money (as a debt) to 4) Avoid speculative transactions such as Garar, the needy, providing flexibility when the payment is Qimar or Maysir, etc.: Garar means speculation, deferred (to help the debtors), and giving them extra time danger, and risk. As a technical term, it refers to is also some ways to do ihsan (in the view of various uncertainty about the outcome of a contract that can Hadiths). On the other hand, the debtor is also encouraged lead to disputes and a court (Mansoori, 2008: 10). to pay off the debt without interfering with the creditor.

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He also recommended sales to facilitate any buyer who Stebbins, R. A. (2001). Exploratory Research in the Social Sciences. intends to return the product and cancel the transaction California: Thousand Oaks, CA: Sage. Steven E. Landsburg, Price Theory, Thomson South-Western, edisi 7, (ibid, pp. 138-40). 2008 Tim, Kamus Besar Bahasa Indonesia, Balai Pustaka These are some of the main guidelines to follow in an Usmani, H. M. (1937). Tafseer-e-Usmani. Islamic economic order. These principles sketch the scope Yin, R. K. (2013). Case Study Research: Design and Methods (5th ed.). for any trader to play in the market. Even though those CA: SAGE Publications. : Thousand Oaks who are spiritually motivated will apply more than just avoiding haraam activities, they try to carry out mandated practices emphasized by referring to Imam Al-Ghazali. Therefore, from the Islamic perspective it is believed that once the market players (individuals or business companies) have the motivation and spiritual orientation needed for doing the obligation and recommendation in their minds and hearts, a fair order of economy will help the whole community reach success in the Hereafter. 5. CONCLUSION The concept of Islamic just price is based on principles revealed from the Quran and Hadits; they are antaradin minkum and justice. The practice of these principles are revealed in the mechanism of market operation which is to avoid practicing the usury, hoarding, gambling, uncertainty, cheating, illicit goods; additionally, the participants should have free will in trading. This idea can be further researched in other areas of the Islamic concept of pricing, such as the Islamic contract of mudharabah, murabahah, ijarah, sukuk, etc.

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